Feds battle Walgreens in painkiller distribution case

A federal crackdown on the Florida pain pill market will pit Walgreens against the Drug Enforcement Administration in a high-level and multi-front legal battle that comes to a capital courtroom this week.

Represented in part by the former U.S. solicitor general, the nation’s largest retail pharmacy company is challenging the DEA’s effort to stop a major South Florida distribution center from shipping controlled substances like oxycodone, a powerful painkiller. Both sides are sounding alarms, as they prepare to face off Thursday before the U.S. Court of Appeals for the District of Columbia Circuit.

“This case involves an abuse of the extraordinary power that the Drug Enforcement Administration wields over ordinary citizens and businesses in the fight against diversion of certain prescription drugs,” Walgreens attorneys said in one brief.

The DEA counters that the company’s busy distribution center in Jupiter, Fla., had a troubled history of filling suspicious drug orders and posed an imminent danger to public safety. The Jupiter facility, one of 13 distribution centers operated by Walgreens nationwide, shipped drugs to more than 850 pharmacies throughout Florida and surrounding states.

“DEA’s investigation revealed that, even when managers recognized that orders plainly raised suspicions, they continued to make shipments without conducting inquiries,” Justice Department attorneys state in a brief.

Underscoring the stakes, Walgreens’ position will be argued Thursday by Gregory G. Garre, who as solicitor general in 2008 served as the Bush administration’s top lawyer. He’s argued more than three dozen times before the U.S. Supreme Court, and his appearance during the 20-minute oral argument Thursday will be before an appellate panel often considered to be the nation’s second-highest court.

“It’s very important, and that’s why we’ve taken the administrative actions that we have,” Mia Ro, a spokeswoman for the DEA’s Miami Field Division, said of the case Tuesday.

Walgreens spokesman Jim Graham said Tuesday that the company will let the legal filings “be the full expression of our views” for the time being.

Last year, another D.C.-based federal judge upheld a similar DEA action against a drug distribution facility in Lakeland, Fla., run by Cardinal Health. Investigators cited a “staggeringly high and exponentially increasing rate of oxycodone distribution” by the Lakeland facility.

Still, the Walgreens case is a little unusual, beyond the fact that it involves such a publicly prominent company. Walgreens operates more than 7,800 pharmacies nationwide and fills nearly 800 million prescriptions annually.

Typically, the appellate court is reviewing decisions from a lower-level trial court. The Walgreens case, though, hasn’t been to a trial. Instead, the company is appealing a DEA administrative “immediate suspension order” imposed in September on the Jupiter distribution facility. That order blocked further controlled substance distribution while the agency sought to formally revoke the center’s registration.

The DEA acted following a six-month investigation into the Jupiter facility, the largest distributor of oxycodone products throughout Florida.

Investigators, for instance, found that one Walgreens pharmacy in a Florida town of fewer than 3,000 residents had been supplied with 3,271 bottles of oxycodone in a single 40-day period. One company official wondered in an email obtained by investigators how the store managed to “even house this many bottle(s),” but distribution continued.

“Even when presented with red flags and obvious signs of diversion, the Jupiter center did not ask questions of its customers or conduct any other relevant due diligence before filling the suspicious orders,” the Justice Department reported in a legal brief.

Oxycodone, also known in some forms as OxyContin, is a strong pain reliever that’s classified as a Schedule II drug. This means it has a currently accepted medical use as well as a “high potential for abuse.” The drugs, Walgreens’ lawyers noted in one legal brief, “have helped treat the suffering of countess patients.”

Walgreens points to an array of remedial actions, including a voluntary suspension of distribution of Schedule II drugs at eight pharmacies, including six that had been the company’s largest purchasers of oxycodone nationwide. The company acted after it had been served with inspection warrants but before the DEA issued its suspension order.

In legal filings, Walgreens argues that the DEA relied on “stale data” that failed to reflect changes in drug distribution. The company also attributes the boost in oxycodone shipments from the Jupiter facility to pharmacies to a change in state law, after Florida lawmakers in 2010 sharply restricted doctors’ ability to directly dispense the drug.

“Walgreens’ and other Florida pharmacies’ best efforts to sort out legitimate patients from potential abusers were inevitably imperfect,” Walgreens’ attorney stated in a legal brief. “Customers filed often heart-wrenching complaints with Walgreens’ management explaining their medical conditions and valid need for the treatments, and lamenting Walgreens’ reluctance to dispense their medications.”

In April, a DEA administrative law judge will hear a related case, involving the agency’s proposed permanent revocation of the registrations used by the Jupiter distribution center and several specific Walgreens pharmacies in Florida.

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